Persuasion and Timing in Asymmetric-Information All-pay Auction Contests
90 Pages Posted: 6 May 2022 Last revised: 7 Jul 2022
Date Written: August 31, 2017
Abstract
In a two-player all-pay auction contest with one-sided asymmetric information, we completely characterize the designer's optimal Bayesian persuasion signal for all orders of moves considered. Effective partial disclosure strategies can be divided into three categories (Threat, Fluke, and Harmony), corresponding to three distinct insights for heating up the contest. We further allow the designer to decide on contestants' order of moves in addition to the information disclosure decision. The optimal timing scheme requires the player with a relatively higher winning value to move first, except when two players' winning valuations are close enough in which case the simultaneous move is optimal.
Keywords: All-pay Auction; Bayes Nash Equilibrium; Information Disclosure; Bayesian Persuasion; Timing
JEL Classification: C72, D72, D82
Suggested Citation: Suggested Citation